Unemployment deficit

The Bundesagentur fuer Arbeit (BA), Germany's federal employment agency, is expected to be 16 billion euros ($23.7 billion) in the hole for the coming year, a spokeswoman confirmed on Saturday after reporting by the news magazine Spiegel.

For 2010, the BA is expecting a total deficit of 18.8 billion euros, though they have 1.8 billion euros in reserve. The balance will have to be underwritten by the federal government.

These figures came to light in a draft budget by the BA. Expenditures of nearly 54 billion euros outweighed the department's income of 36.1 billion euros, resulting in the deficit.

Calculations for next year show an expected cost of 22.5 billion euros in unemployment claims alone, 4.8 billion euros more than in 2009, an increase of more than 21 percent year-over-year.

The expenses for short term workers, employees who are working fewer days per week as a cost-cutting measure, are likely to decline however. The BA calculated a reduction in the coming year of 530,000 benefit recipients.

Already in this year the reserves of the BA have soaked up shortages of almost 17 billion euros.

Experts had long expected that, due to improving labor market trends, there would be a balance of 3 billion euros in the reserves. However, short term worker programs and companies going bankrupt have put more of a drain on the budget than anticipated. At the same time, increased job losses have reduced contributions into the government's unemployment insurance program.

sjt/dpa/AFP
Editor: Andreas Illmer